Once again, I drew the short (no pun intended) end of the stick and must discuss stocks to sell right now. Understandably a sensitive topic and one that arouses myriad emotions, I’m just going to stick with the hard numbers. Whether you agree or not is more of a tertiary issue. Primarily, it’s vital that you at least recognize the obstacles with these investments.
To be clear, this list of stocks to sell will not impugn the core narrative of the underlying companies. Frankly, virtually every capitalist enterprise got the raw end of the deal during the coronavirus pandemic. With the Federal Reserve aiming to cut down inflation by effectively shrinking the money supply to rapidly rising global recession fears, investors, unfortunately, own many reasons to exit their positions.
The harsh reality is that these stocks to sell find themselves more vulnerable than others. So, below are the names to watch out for.
Pressure BioSciences (PBIO)
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Based out of Massachusetts, Pressure BioSciences (OTCMKTS:PBIO) is a leader in the development and sales of innovative, enabling, pressure-based platform solutions for the worldwide life sciences industry. Some of its applications include bio-therapeutics characterization, soil and plant biology, vaccine development, and counter-bioterror protocols.
Though innovative, Pressure BioSciences, unfortunately, failed to capture investors’ attention. For one thing, on a year-to-date basis, PBIO dropped over 46% of its equity value. Further, in the trailing month, PBIO shed 3.5%, which is problematic since many publicly traded securities enjoyed a boost recently. As an example, the benchmark S&P 500 gained 6% in the trailing month.
Financially, the company presents high risks. Most worrisome in my view, the company’s cash-to-debt ratio sits at 0.01 times, worse than 99% of the underlying sector. As well, its three-year revenue growth rate (on a per-share basis) fell into negative territory. Frankly, it’s too much of a mess, making it one of the stocks to sell.
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As its name implies, Intrusion (NASDAQ:INTZ) provides security software solutions. Specifically, Intrusion offers real-time network monitoring to protect from zero-day, malware-free, and other contemporary attacks. Fundamentally, INTZ should garner plenty of positive attention. In 2021, for instance, the average number of cyberattacks and data breaches increased by 15.1% from the prior year.
Therefore, against a cynical backdrop, Intrusion enjoys a large (and expanding) total addressable market. To be sure, INTZ represented one of the stocks in the black this year. However, recent volatility saw shares succumb to a performance nearly 11% below parity. Sadly, one of the distracting factors centers on its balance sheet. With an Altman Z-Score in the red to the tune of 11 points, Intrusion represents a deeply distressed business.
It also means the company faces possible bankruptcy risk in the next two years. If that wasn’t enough, INTZ is expensive based on a price-to-sales ratio of 8.5 times. This ranks worse than nearly 84% of the competition, making INTZ one of the stocks to sell.
Steel Connect (STCN)
Operating out of Massachusetts, Steel Connect (NASDAQ:STCN) provides supply chain management services to software companies. Specifically, Steel Connect commands a wholly owned subsidiary called ModusLink, which provides supply chain solutions for the world’s top brands across a diverse range of industries. These include consumer electronics, packaged goods, and computing and storage.
Unfortunately, the erosion of consumer sentiment both here and abroad contributed to decelerated demand profiles. Some of the worst-hit sectors, such as consumer electronics, represent one of the go-to clients for Steel Connect. Moreover, a proposed merger deal fell through, resulting in a severe decline in STCN. Frankly, just this news alone may be worth justifying its inclusion on a list of stocks to sell.
Financially, Steel Connect faces significant margin pressures, leading to a deeply negative return on equity. As well, its crimson-stained Altman Z-Score reflects an extremely distressed business. It’s just time for most investors to walk away.
Golden Minerals (AUMN)
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Based in Golden, Colorado, Golden Minerals (NYSEAMERICAN:AUMN) is a junior mining firm specializing in gold and silver. It has one operating mine in Mexico and a pipeline of development and exploration projects in Mexico, Argentina, and Nevada.
Fundamentally, the Fed’s tightening of liquidity ordinarily reflects problems for commodities-based enterprises. Essentially, as cash becomes more valuable, commodities decline in price. However, in recent sessions, the gold price broadly swung higher, likely due to the fear trade. Unfortunately, this dynamic provided little comfort to AUMN, with shares dropping 30% YTD.
Per Gurufocus.com, what investors need to watch out for is that Golden Minerals may be a value trap. While shares may look like they’re discounted, the company suffers from margin pressures. Further, even with strong revenue growth over the last three years, AUMN remains overvalued. For instance, its price-to-book ratio is 4 times, worse than nearly 81% of the competition.
With superior alternatives available, AUMN will likely be one of the stocks to sell for anyone that’s not a hardened gambler.
Clovis Oncology (CLVS)
Headquartered in Boulder, Colorado, Clovis Oncology (NASDAQ:CLVS) is an American pharmaceutical company that mainly markets products for treatment in oncology. Like any other pharma actively pursuing therapies for the world’s most dreaded diseases and conditions, I have nothing but respect for the science undergirding Clovis. However, the investment proposition simply rates it as too dangerous.
That’s not my assessment. According to Benzinga, Clovis stands on the precipice as bankruptcy looms. Based on its current cash position along with revenue projections for its therapeutic pipeline, “the company will not have sufficient liquidity to maintain operations beyond January 2023.”
As if to stress the point, CLVS hemorrhaged over 71% of equity value in the trailing month. Now, to be fair, in the meme-ish world we live in, speculators piled into Clovis recently. Over the trailing five days, CLVS gained 26%. However, the longer-term assessment still rates as poor. Therefore, CLVS is one of the stocks to sell.
Acorn Energy (ACFN)
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Based in Delaware, Acorn Energy (OTCMKTS:ACFN) invests in electricity generation and security. Specifically, the company provides remote monitoring and control systems and services for generators, pipelines, and other industrial assets through its OmniMetrix subsidiary. While the underlying market such as applications tied to the Internet of Things offers much relevance, ACFN hasn’t translated this into a strong performance this year.
Since the January opener, ACFN finds itself down almost 37%. In the trailing month, shares lost more than 2% of equity value. Unfortunately, then, the company failed to capitalize on the near-term momentum that boosted the wider equities sector.
Against the financials, ACFN ranks among the stocks to sell because of viability concerns. For instance, the company’s Altman Z-Score sits 22 points below parity, indicating severe distress. It too can potentially suffer bankruptcy risk in the next two years. Combined with negative trending revenue, profit margins, and return on asset (reflecting a poor-quality business), ACFN is for professional speculators.
Based in Taiwan, SemiLEDS (NASDAQ:LEDS) is a light-emitting diode (LED) semiconductor manufacturer. Although a relevant player in any other market cycle, the woes of the new normal have been particularly rough on LEDS stock. From global supply chain disruptions to demand erosion for products utilizing advanced semiconductors, SemiLEDS dropped 49% YTD in the charts.
In the trailing month, shares also declined to the tune of 1.6%, meaning that the underlying firm failed to capture positive momentum at a time when the major equity indices swung higher. Further, a mixed-bag earnings report for the company’s fiscal Q4 results didn’t help. Though revenue and operating margins improved on a year-over-year basis, they both slipped sequentially against the prior quarter.
Against the bigger picture, LEDS rates as one of the stocks to sell because of concerns centered on its balance sheet. Specifically, its Altman Z-Score sits over 15 points below parity, reflecting a deeply distressed business.
Let’s end on an encouraging note with one stock to buy. For this, I’m going to elect the biotechnology firm BioNTech (NASDAQ:BNTX). Initially, the company rose to prominence because of helping to pioneer a novel vaccine for the SARS-CoV-2 virus. However, with fears of Covid-19 fading throughout this year, BNTX lost much of its relevance.
However, that relevance stormed back lately, with Covid cases rising again. For instance, BioNTech’s vaccine received the green light to be made available to foreign residents living in China. In addition, if Covid outbreaks continue to disrupt international commerce, BNTX could enjoy a possible demand boost.
Although BioNTech endured choppy weather throughout the new normal, the company overall remains a compelling buy. Financially, it enjoys myriad strong points, including a stable, cash-rich balance sheet and outstanding revenue and profitability metrics. As well, the market prices BNTX at less than 4-times TTM earnings. It’s probably a steal for forward-looking investors.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.
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